Post on 19-Jun-2020
Thomas S. Windmuller Cairo, November 6, 2006
Winning Strategies for African Airlines:
Aligning Governments with the Industry Agenda
Air transport is critical to the global economy
Airlines are the US$450 billion heart of a value chain that supports US$2.9 trillion in economic activity
28 million jobs
471,000 jobs in Africa
Air transport is a critical industry
Correct policy decisions essential for growth
Governments aligned with the industry agenda
We are an industry
in crisis
We are an industry
in crisis
Since 9/11 airlines
have lost over
US$40 billion
We are an industry
in crisis
Since 9/11 airlines
have lost over
US$40 billion
African carriers losing
$800 billion in 2006;
$900 million in 2007
We are an industry
in crisis
Change has never
been more important
Airlines responded with efficiency
Labour productivity
increased 33%
Airlines responded with efficiency
Sales/distribution costs
dropped 10%
Airlines responded with efficiency
Non-fuel unit costs
reduced 13%
…eaten by a rising fuel price
…eaten by a rising fuel price
2001 fuel bill:
13% operating costs
US$43 billion
…eaten by a rising fuel price
2001 fuel bill:
2006 fuel bill: US$115 billion
13% operating costs
26% operating costs
US$43 billion
…eaten by a rising fuel price
2001 fuel bill:
2006 fuel bill: US$115 billion
13% operating costs
Increase from 2005 = US$24 billion
26% operating costs
US$43 billion
6 November 2006 AFRAA AGA 19
Moving back into profit as revenues boom
Source:
ICAO / IATA
8.6 8.2 8.5
3.7
-13.0
-11.3
-7.6
-5.6
-3.2
-1.7
1.9
-15.0
-10.0
-5.0
0.0
5.0
10.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006F 2007F
% s
ale
s
-15
-10
-5
0
5
10
US
$ b
illio
n
Net losses (RHS)
Operating margin (LHS)
6 November 2006 AFRAA AGA 20
Jet Fuel and Crude Oil Price ($/barrel)
20.0
40.0
60.0
80.0
100.0
Jan03 May03 Sep03 Jan04 May04 Sep04 Jan05 May05 Sep05 Jan06 May06 Sep06
Jet fuel price
Source: Platts, RBS
Crude oil
price (Brent)
One key uncertainty concerns oil prices
$/b
6 November 2006 AFRAA AGA 21
Fuel bills likely to remain high in 2007
Source:
IATA 0
20 000
40 000
60 000
80 000
100 000
120 000
140 000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
F
2007
F
$ m
illio
n
0
5
10
15
20
25
30
% o
pera
ting c
osts
Fuel bill,
% opex
Fuel bill, $ million
Increase Safety
Reduce airline costs
Intelligent Regulation
Safety
Liberalization
Training Security
Fuel Efficiency
External Costs
Safety
2005 accident rate was the lowest ever
- our top priority
6 November 2006 AFRAA AGA 25
Accident Rate Reduction
0.70
1.07
0.76
1.06
0.97
0.700.75
0.68
0.57
0.35
0.30
0.76
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Q3 20
06 Estim
ate
IATA Member Hull Loss Rate
Industry Rate
IATA Rate Trend
Industry rate at 0.76 per
million flights in 2005
IATA member accident
rates 53% better than
industry average at 0.35
per million flights Accid
ent R
ate
6 November 2006 AFRAA AGA 26
Accident Rate Target
6 November 2006 AFRAA AGA 27
Regional Safety
6 November 2006 AFRAA AGA 28
2004 Western-built Jet Hull Loss Rate by Region
1.3
5.2
5.3
0.94
World 0.78
Hull losses per million
departures by region of
operator, Western-built
Jets 2004
0.52 0.29
6 November 2006 AFRAA AGA 29
2005 Western-built Jet Hull Loss Rate by Region
Latin America/
Caribbean
2.6 Africa
9.2
Mid-East/North Africa
3.8 Asia-Pacific
1.3
World 0.76 Hull losses per million departures for
operators based in the IATA region,
western-built jets 2005
Europe
0.3
North America
0.2 North Asia
0.0
6 November 2006 AFRAA AGA 30
2006 Western-built Jet Hull Loss Rate by Region
(Q1-Q3)
Latin America/
Caribbean
0.82
Africa
0.0
Mid-East/North Africa
0.0
Asia-Pacific
0.0
World 0.53
Hull losses per million departures for
operators based in the IATA region,
western-built jets - Projected 2006 Q1-Q3
Europe
0.84
North America
0.58
North Asia
0.0
6 November 2006 AFRAA AGA 31
2006 Western-built Jet Hull Loss Rate by Region
(Q3 2006 & 10-Year Rate)
Latin America/
Caribbean
0.82
2.10 Africa
0.0
9.65
Mid-East/North Africa
0.0
2.29
Asia-Pacific
0.0
1.17
World 0.53 – 2006 rate (thru Q3)
Rates 0.96 – 10 year rate
Hull losses per million departures for
operators based in the IATA region,
western-built jets - Projected 2006 Q1-Q3
Europe
0.84
0.53
North America
0.58
0.39
North Asia
0.0
0.40
Russia
2 HL
0 HL
6 November 2006 AFRAA AGA 32
Latin America/
Caribbean
3.4 Africa
6.0
Mid-East/North Africa
6.5 Asia-Pacific
1.5
World 2.1 Hull losses per million departures for
operators based in the IATA region, all
aircraft types (eastern/western, jet and
turboprop) - Projected 2006 Q1-Q3
Europe
1.5 North America
1.9
North Asia
1.0 Russia
5.9
Q3 2006 Hull Loss Rate by Region
(All Aircraft Types)
6 November 2006 AFRAA AGA 33
Six-point Safety Programme
The IATA Operational Safety Audit (IOSA) is
at the core of our efforts to further improve
safety
The IATA Operational Safety Audit (IOSA) is the 1st global standard
for airline safety management
The IATA Operational Safety Audit (IOSA)
will be a condition of IATA membership
from 2008
6 November 2006 AFRAA AGA 37
Audits Completed & Saved As at October 31, 2006
0
50
100
150
200
250
300
350
400
Sep-0
3
Nov
-03
Jan-
04
Mar
-04
May
-04
Jul-0
4
Sep-0
4
Nov
-04
Jan-
05
Mar
-05
May
-05
Jul-0
5
Sep-0
5
Nov
-05
Jan-
06
Mar
-06
May
-06
Jul-0
6
Sep-0
6
Nu
mb
er
of
IAR
Req
uests
Completed Audits Registrations
6 November 2006 AFRAA AGA 38
NO TYPE OR IMAGES CAN
TOUCH THE SKY
Partnership for Safety Systematic approach towards safety improvement
IATA’s Partnership for Safety
17 IOSA Awareness
Workshops
22 gap analyses
IATA’s Partnership for Safety
17 IOSA awareness workshops
22 gap analyses
Non-Member airline participation
IATA’s Partnership for Safety
6 November 2006 AFRAA AGA 43
6 November 2006 AFRAA AGA 44
FLAGS OF
CONVENIENCE
NO
The IATA Operational Safety Audit (IOSA) is
at the core of our efforts to further
improve
Many governments are incorporating IOSA in their safety oversight
safety
Many governments are incorporating IOSA in their
safety oversight
Egypt Madagascar
South Africa
Ghana
Nigeria
Ethiopia
Kenya
ACAC
All governments should incorporate IOSA in their
safety oversight
AOCs
Foreign Operators
Codeshares
All governments should incorporate IOSA in their
safety oversight
AOCs
Foreign Operators
Codeshares
No cost for
governments
Security is a top priority…
We are a much more secure industry since 2001
The failure of BAA to handle 01
All airports must look at their contingency plans
Ensure the goal is continued operations
capacity is not acceptable
We need standardisation and harmonisation
02
Governments improved security after 2001
but missed the boat on harmonisation
Funding 03
Funding – terrorism is a national security issue
03
Funding – terrorism is a national security issue
03
It is a government responsibility to protect its citizens
and to pay the bill
Funding – added measures since 2001
03
US$5.6 billion [a year]
now cost airlines and passengers
…we must also improve efficiency
Simplifying the Business
Simplifying the Business
Make travel and shipping more convenient
Save US$6.5 billion >
Simplifying the Business
Save US$6.5 billion >
Bar coded boarding passes
RFID for aviation
Common use self-service kiosks
E-freight
100% e-ticketing by 2007
6 November 2006 AFRAA AGA 61
6 November 2006 AFRAA AGA 62
ET progress by airlines September 2006
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2004 2005 2006
Global
United States
Europe
North Asia
The Americas
Africa
Asia Pacif ic
MENA
CIS
Targets
6 November 2006 AFRAA AGA 63
African airlines issuing ET in BSPs
0.00 %
10.00 %
20.00 %
30.00 %
40.00 %
50.00 %
60.00 %
70.00 %
80.00 %
90.00 %
100.00 %
Sep-
05
Oct-
05
Nov-
05
Dec-
05
Jan-
06
Feb-
06
Mar-
06
Apr-
06
May-
06
Jun-
06
Jul-
06
Aug-
06
Sep-
06
Nationwide Airlines
SAA
Air Austral
Kenya Airways
Air Namibia
Ghana International
Air Seychelles
Air Mauritius
Precision Air Services
Ethiopian Airlines
and 31 airlines
still to start ET
10 airlines with ET
6 November 2006 AFRAA AGA 64
6 November 2006 AFRAA AGA 65
6 November 2006 AFRAA AGA 66
Why is Interline ET difficult?
With ET the systems do all the work
Systems must be synchronised or the ET fails
Each interline partnership is a separate task
How to proceed faster Sign contracts for all IETs needed
Use IATA MatchMaker and GBR Generator
Rely upon your System provider
agent
Pax
Partner
airlines
Handlers
Airline
ET
database
6 November 2006 AFRAA AGA 67
Why is Ground handling difficult?
DCS system must be aligned with Airline’s ETS
But Ground Handlers often use other DCSs
Airline must link its ETS to all the DCS systems they use
This link is different according to the ET method Interactive mode
Working Copy
ETL
Again – give your System Provider the complete task
Operating
Carrier
(ZZ)
Ground
Handler
(XYZ)
GH
agreement
(722h)
6 November 2006 AFRAA AGA 68
6 November 2006 AFRAA AGA 69
The Africa Challenge – Can ET really work?
No power/no telecoms
Power/telecoms outages
Completely manual stations
6 November 2006 AFRAA AGA 70
The Africa Challenge – Can ET really work?
No power/no telecoms
Power/telecoms outages
Completely manual stations
No more dependent with ET
Use the PNL
Have a contingency plan
6 November 2006 AFRAA AGA 71
The Africa Challenge – Can ET really work?
No power/no telecoms
Power/telecoms outages
Completely manual stations
No more dependent with ET
Use the PNL
Have a contingency plan
No excuses - ET works everywhere
6 November 2006 AFRAA AGA 74
Airlines with ET confident of
reaching 100%
In April they forecast
Reaching 98% ET
Having 2500 IET agreements
Major airlines without ET say
they too will make it
But should they be so confident?
Airlines are confident of ET
6 November 2006 AFRAA AGA 75
65% ET (Sep)
30% of Interline coupons ET (Aug)
111 of 171 airlines w/o ET will issue ET
Of 130 airlines with ET in Feb 2006
60 are increasing fast enough to exceed 99%,
29 are within 90-99%,
22 within 70-99% and
19 below 70%
Will be well over 90% ET at end 2007
Time to stop paper or find alternative
Reality Check
6 November 2006 AFRAA AGA 76
So what is IATA doing? Keep pressure to get to 100%
Alerting CEOs to dangers
Working with ET managers at airlines
Warn of impact not having 100% ET on time
Pressing Interline ET capability – IET Workshops,
MatchMaker, Super-Hub Capability, GBR
Generator and examining a solution to the
Residual (20%) Interline Problem
Need cooperation of System Providers, GDSs,
Ground Handlers to offer ET capability now
Lobby Regulators to overcome ET hurdles
Any other ideas?
6 November 2006 AFRAA AGA 77
Fuel efficiency GO Teams
Maximise fleet’s fuel efficiency
Flight operations
Ground operations
Engineering and maintenance
6 November 2006 AFRAA AGA 78
Fuel efficiency GO Teams
Maximise fleet’s fuel efficiency
Flight operations
Ground operations
Engineering and maintenance
Savings of 3-8% of an airline’s
total fuel bill
4 African airlines completed
3 African airlines committed
There is a role for Governments
Pretoria
Algiers
UM731
UM998
RUDAS GBV
MAIDUGURI NODJAMENA
ORAN
Introducing new, shorter, direct routes
Red Carpet express
North-South route saves
the industry US$7.6
million total savings
Supporting continuous descent approaches
Ensuring there is sufficient airport and airspace capacity
6 November 2006 AFRAA AGA 83
14 December 2004 Global Press Briefing 84
Airport and ATC Charges in Africa:
Agenda for Change
Meaningful consultation
Non-discrimination
Transparency
Cost related charges
Better Cost efficiency
14 December 2004 Global Press Briefing 85
The Reality in Africa
6 November 2006 AFRAA AGA 86
ANSPs
African En-route Charges for a B767-600
$0
$500
$1,000
$1,500
$2,000
Sud
an
Nig
eria
Euro
pe
an A
vg.
AS
EC
NA
Sou
th A
fric
a
Robert
s
Moro
cco
Ang
ola
Alg
eria
DR
Congo
Nam
ibia
Cape V
erd
e
Ghana
Tunis
ia
NavC
anada
Mauri
tius
Bots
wana
Lib
ya
Seych
elle
s
Ken
ya
Egypt
Zim
ba
bw
e
Mozam
biq
ue
Uganda
Som
alia
Tanza
nia
Zam
bia
Rw
anda
Eth
opia
Erite
rea
Mala
wi
Djib
outi
ASECNA
Nav Canada
Source Data: IATA En-route Charges Manual
European Average
6 November 2006 AFRAA AGA 87
Airports Benchmark of African Airports: Landing and Passenger Charges
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
WDH
LOS, K
AN, P
HC, A
BV
EBB
NBO
JNB, D
UR, C
PT
HRE
DKR
CM
N, C
ASKR
TLU
NM
RU
Alger
ia (A
ll Apt
s)
B7
47
-40
0 C
ha
rge
s in
US
D
Source Data: IATA En-route Charges Manual
14 December 2004 Global Press Briefing 88
The Reality in Africa
6 November 2006 AFRAA AGA 89
Training
6 November 2006 AFRAA AGA 90
International Airlines Training Fund
6 November 2006 AFRAA AGA 91
International Airlines Training Fund
20 courses in 2006, including 17 safety-related
Close partnership with AFRAA
6 November 2006 AFRAA AGA 92
20 courses in 2006, including 17 safety-related
Close partnership with AFRAA
29 African airlines
429 airline staff trained, 63 on scholarships
International Airlines Training Fund
We need a vision for a liberalised industry
2003 ICAO Fifth Air Traffic Conference agreed to a vision of progressive liberalisation
2003 Air Traffic Conference 5 agreed to a vision of progressive liberalisation
The agreement was a landmark
2003 Air Traffic Conference 5 agreed to a vision of progressive liberalisation
…but the results were few
Yamoussoukro Declaration
Air transport is stuck with a 60 year-old bilateral system
Wake up to
We are a mass transport for 2.2 billion passengers
It is a different world
It is a different world and the rules must change
Governments have an essential role
Safety
Security
Regulating monopolies
where markets don’t work
Governments have an essential role
Safety
Security
Regulating monopolies
where markets don’t work
We don’t need governments
Passenger demand should decide
to determine markets
Airlines are businesses
Airlines are businesses But the flag on the aircraft tail is so heavy
Airlines are businesses But the flag on the aircraft tail is so heavy
…it is sinking the industry
Freedom to run our business like a business
6 November 2006 AFRAA AGA 110
Africa must accelerate liberalisation
6 November 2006 AFRAA AGA 111
cxcxcxz
Only path to economic prosperity
6 November 2006 AFRAA AGA 112
‘Airlift’ strategy of South Africa
Air transport is the most exciting industry in the world
African carriers have come a long way in difficult circumstances
We stand ready
to assist you
6 November 2006 AFRAA AGA 117
6 November 2006 AFRAA AGA 118
Drive the
pace of
change
We need your help
6 November 2006 AFRAA AGA 120
We need the
leadership and
support of you
the CEO’s
Without your drive and direction
There is little we can achieve
With your commitment
there is little that can
stop us
6 November 2006 AFRAA AGA 123